CVS soars after fourth-quarter profit signals improvement
The shares rose as much as 15 percent when markets opened Wednesday in New York, their biggest intraday gain since October 1999.
CVS is trying to turn around its drugstore chain and insurance business, where profit has been hit by underpricing of plans and cuts to quality ratings that help determine payments from US health programs. Chief Executive Officer David Joyner, who took the helm in October, has said that a recovery will take years.
They company is 'encouraged' by recent conversations with the government about payment rates for Medicare Advantage, a private version of the US health program for older and disabled people, Joyner said on a conference call. Rates proposed by the government didn't take into account increased health-care use and costs, he said.
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The company is also being pushed for change by activist investor Glenview Capital Management. Its CEO, Larry Robbins, one of four new members who have joined CVS's board, has said that the company should bring down debt.
Medical Costs
In the insurance unit, CVS spent 94.8 percent of premium revenue on medical care in the quarter, less than analysts expected. Investors prefer a lower number. However, CVS said in a separate filing that high use of medical services will continue to pressure the business.
The company pointed in particular to high costs in its business that manages care for patients on Medicaid, the US health program for the poor. States have been cutting Medicaid rolls since the pandemic, often culling healthier patients in the program while sicker patients remain.
Revenue in all major divisions — insurance, drugstores and health services — were ahead Street expectations, as was overall quarterly revenue of $97.7 billion.
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Adjusted earnings for 2025 will be $5.75 to $6 a share, CVS said, while the average estimate of analysts surveyed by Bloomberg was $6. CVS called the guidance an 'appropriately achievable baseline' with 'opportunities for outperformance.'
Investors had expected the 2025 profit outlook to come 'comfortably below' analyst estimates, so CVS's expectation 'looks fine,' Leerink Partners analyst Michael Cherny wrote in a note to clients.
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Yahoo
28 minutes ago
- Yahoo
As Harvard's and Yale's private equity holdings go on sale, buyers can use this technique for 1,000% windfalls. ‘It makes your brain melt'
The secondary market for private equity stakes is booming as buyers are eager to snap up assets being shed by investors. There's reason to believe Harvard, Yale, and other elite institutions might be getting a good deal, even as they sell their holdings at a discount to current valuations. Some of the country's most elite institutions are offloading parts of their private equity portfolios. As funds take longer to return money to investors, Harvard and Yale are selling at a discount with endowments looking for more liquidity and flexibility amid economic turbulence. But both sides of such deals can make surprising gains. This portfolio maintenance doesn't appear linked to President Donald Trump's attack on university finances, including a possible tax hike on endowments. Industry skeptics think these sales, however, highlight growing concerns that returns in the opaque world of private equity aren't always all they're cracked up to be. 'With elite universities' private equity investments on the auction block, the big reveal is coming,' Nir Kaissar, founder of asset management firm Unison Advisors, wrote in a Bloomberg opinion column on Thursday. University endowments typically make for ideal investors in alternative assets—with virtually infinite investment horizons, they can ride out wild gyrations in the public markets by locking up billions of dollars over several years. On its face, that move has been a no-brainer. As Kaissar noted, Bloomberg's weighted index of U.S. PE funds returned 9.4% year over year from 2007 to 2024. The index's annualized standard deviation, a common measure of volatility, was just 7.2%. The S&P 500 gained 10.5% in that span with a standard deviation of 16.8%, a much worse return on a risk-adjusted basis. These numbers, however, may not reflect the underlying picture. Unlike stocks trading on public exchanges, the prices of private assets don't change based on the whims of investors day-to-day. Instead, valuations of most private companies, real estate properties, and other assets PE firms hold are typically based on subjective assumptions that don't fluctuate like public equity markets do, Tim McGlinn, an investment veteran and former adjunct finance professor at Seton Hall, told Fortune. 'There's nothing intrinsically wrong with that,' said McGlinn, who blogs about the alternatives industry at But when investors or prospective investors believe the holdings can actually be sold at those prices, 'that's when things become problematic.' Ultimately, private equity firms make money for investors by exiting their investments, when they attempt to turn notional valuations on paper into cash. Therefore, there must be some correlation between the performance of public and private assets, said Jason Reed, a finance professor at the University of Notre Dame. 'If the market's doing really well broadly, well then you're going to have lots of opportunities for businesses to buy your company, other private equity companies to buy your company, to take them public and IPO them,' he told Fortune. 'But if the economy is not doing great, businesses are struggling, then you're not going to have as many opportunities overall to sell.' Billionaire hedge fund owner Bill Ackman, a Harvard alumnus, has claimed his alma mater's $53 billion endowment, almost 40% of which is allocated to private equity, is significantly overstated. 'I believe that a substantial part of the reason why many private assets remain private despite the stock market near all-time highs is that the public market will value private assets at lower values than they are being carried at privately,' Ackman, the CEO of Pershing Square Capital, wrote in a social media post last month. The Harvard Management Company, which oversees the university's endowment, declined to comment. It recently agreed to sell roughly $1 billion of its PE stakes, following a similar move in the summer of 2021. That came at a time of 'significant ebullience,' the university noted in its 2022 financial report, allowing the school to avoid discounts the funds would have faced just over a year later. Yale, meanwhile, is negotiating a nearly $3 billion sale of private equity holdings at a discount of less than 10%, a spokesperson for the Yale Investments Office told the school's newspaper. The university pioneered the institutional push into alternative assets, with 95% of its $41 billion endowment allocated to growth-oriented assets like PE, venture capital, real assets, and global equities. 'Following a months-long review, the University is in process to sell select private equity fund interests,' Yale said in a statement to Fortune. 'Private equity remains a core element of our investment strategy, and we continue to commit significant capital to our existing world-class partners, while pursuing new private equity opportunities to support the long-term growth of the Endowment.' This doesn't appear to be a distressed sale, McGlinn said, but the deal is otherwise hard to evaluate. More mature funds trade very differently than newer ones, and various positions are typically packaged together in these types of transactions. 'Yale being Yale, you can assume they're getting the best price they can,' McGlinn said. Still, investors in PE funds, known as 'limited partners,' sold their stakes at an average discount of 11% compared to the net asset value, or NAV, of these holdings on their balance sheets, according to Jeffries. It may seem odd that universities are looking to sell when valuations are likely down across the board this year as borrowing costs remain elevated. But demand in the secondary market is booming. Secondary sales increased 45% to $162 billion last year, per Jeffries. As a result, Yale, Harvard, and other universities could take much less of a haircut than they might have feared while also booking gains on their initial stakes. That's because there is reason to believe many buyers are willing to overpay, McGlinn said. Regardless of what secondary funds dish out to acquire these stakes, he explained, they are allowed to then mark these investments up to the old net asset value. McGlinn calls this process 'NAV squeezing.' As The Wall Street Journal reported last year, it can result in one-day windfalls of 1,000% or more, gains that McGlinn said secondary funds report as real returns. 'It makes your brain melt,' he said. Comparing NAV squeezing to a Ponzi scheme might go too far, said Jeffrey Hooke, a senior lecturer in finance at Johns Hopkins Carey Business School and a longtime critic of PE. But he agrees it looks quite shaky, even if the technique is permissible according to generally accepted accounting principles, or GAAP. 'It's almost like a full wash and rinse cycle,' said Hooke, formerly the principal investment officer of the World Bank's International Finance Corporation. Universities, of course, get to be on the other side of these deals. Even though they are selling their PE stakes at a discount to NAV, they could be getting more than the capital they had committed to those investments up until this point. In other words, endowments might still be escaping with a profit. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Newsweek
2 hours ago
- Newsweek
Medicaid Expands Access for Tribes Across 6 States
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Native American tribal clinics in six states have been granted new powers to provide Medicaid clinic services, giving 89 new tribes more health care access. The Centers for Medicare and Medicaid Services (CMS) expanded the powers of the clinics by approving Medicaid State Plan Amendments, which allow Indian Health Service (IHS) and tribal clinics to provide services beyond a specific clinic site. Why It Matters According to CMS, Native American and Alaska Native individuals are more susceptible to chronic illness than other groups in the U.S. population. The expansion of Medicaid services means that tribal clinic service providers in the affected states are better equipped to deliver care in areas other than their clinics, such as remote residential areas. What To Know The expansion, which was announced on Friday, has increased Medicaid access in six states: Minnesota, New Mexico, Oregon, South Dakota, Washington, and Wyoming. Washington and Mexico saw the highest number of tribes gain better access, with 29 and 22 tribes, respectively—more than half of the entire program. Eleven tribes in Minnesota will benefit, while nine each where identified in South Dakota, Wyoming, and Oregon. Stock image of a Medicaid Accepted Here sign. Stock image of a Medicaid Accepted Here sign. Getty Images The expansion works by granting existing facilities managed by IHS and tribal clinics the authority to perform Medicaid care services outside their "four walls," a requirement usually imposed on the IHS. This means that the clinics are able to provide care beyond the physical site, in other important places in the community such as homes and schools. There are over 2.9 million Native Americans in the U.S., and medical research has indicated that they are more susceptible to chronic illnesses such as diabetes, heart disease, and cancer than other groups. During the height of the Coronavirus pandemic, Native American communities were some of the hardest hit by the infection. For example, the Navajo Nation, the largest Native American territory in the U.S. with over 173,600 residents, had the highest per capita infection rate in the country by May 2020. What People Are Saying Dr. Mehmet Oz, the administrator for the Centers for Medicare and Medicaid Services, said in a statement announcing the expansion: "Until last year, federal rules prevented IHS and Tribal Medicaid clinic services providers from delivering Medicaid clinic services to vulnerable Tribal patients outside the four walls of the clinic. "These approvals help vulnerable Americans get care when and where they need it most." What Happens Next Each state has 90 days to implement the expansion, according to letters sent to state authorities by CMS.
Miami Herald
3 hours ago
- Miami Herald
‘Expensive and complicated': Most rural hospitals no longer deliver babies
Nine months after Monroe County Hospital in rural South Alabama closed its labor and delivery department in October 2023, Grove Hill Memorial Hospital in neighboring Clarke County also stopped delivering babies. Both hospitals are located in an agricultural swath of the state that's home to most of its poorest counties. Many residents of the region don't even have a nearby emergency department. Stacey Gilchrist is a nurse and administrator who's spent her 40-year career in Thomasville, a small town about 20 minutes north of Grove Hill. Thomasville's hospital shut down entirely last September over financial difficulties. Thomasville Regional hadn't had a labor and delivery unit for years, but women in labor still showed up at its ER when they knew they wouldn't make it to the nearest delivering hospital. "We had several close calls where people could not make it even to Grove Hill when they were delivering there," Gilchrist told Stateline shortly after the Thomasville hospital closed. She recalled how Thomasville nurses worked to save the lives of a mother and baby who'd delivered early in their ER, as staff waited for neonatal specialists to arrive by ambulance from a distant delivering hospital. "It would give you chills to see what all they had to do. They had to get inventive," she said, but the mother and baby survived. Now many families must drive more than an hour to reach the nearest birthing hospital. Nationwide, most rural hospitals no longer offer obstetric services. Since the end of 2020, more than 100 rural hospitals have stopped delivering babies, according to a new report from the Center for Healthcare Quality & Payment Reform, a national policy center focused on solving health care issues through overhauling insurance payments. Fewer than 1,000 rural hospitals nationwide still have labor and delivery services. Across the nation, two rural labor and delivery departments shut their doors every month on average, said Harold Miller, the center's president and CEO. "It's the perfect storm," Miller told Stateline. "The number of births are going down, everything is more expensive in rural areas, health insurance plans don't cover the cost of births, and hospitals don't have the resources to offset those losses because they're losing money on other services, too." Staffing shortages, low Medicaid reimbursement payments and declining birth rates have contributed to the closures. Some states have responded by changing how Medicaid funds are spent, by allowing the opening of freestanding birth centers, or by encouraging urban-based obstetricians to open satellite clinics in rural areas. Yet the losses continue. Thirty-six states have lost at least one rural labor and delivery unit since the end of 2020, according to the report. Sixteen have lost three or more. Indiana has lost 12, accounting for a third of its rural hospital labor and delivery units. In rural counties the loss of hospital-based obstetric care is associated with increases in births in hospital emergency rooms, studies have found. The share of women without adequate prenatal care also increases in rural counties that lose hospital obstetric services. And researchers have seen an increase in preterm births - when a baby is born three or more weeks early - following rural labor and delivery closures. Babies born too early have higher rates of death and disability. Births are expensive The decline in hospital-based maternity care has been decades in the making. Traditionally, hospitals lose money on obstetrics. It costs more to maintain a labor and delivery department than a hospital gets paid by insurance to deliver a baby. This is especially true for rural hospitals, which see fewer births and therefore less revenue than urban areas. "It is expensive and complicated for any hospital to have labor and delivery because it's a 24/7 service," said Miller. A labor and delivery unit must always have certain staff available or on call, including a physician who can perform cesarean sections, nurses with obstetric training, and an anesthetist for C-sections and labor pain management. "There's a minimum fixed cost you incur (as a hospital) to have all of that, regardless of how many births there are," Miller said. In most cases, insurers don't pay hospitals to maintain that standby capacity; they're paid per birth. Hospitals cover their losses on obstetrics with revenue they get from more lucrative services. For a larger urban hospital with thousands of births a year, the fixed costs might be manageable. For smaller rural hospitals, they're much harder to justify. Some have had to jettison their obstetric services just to keep the doors open. "You can't subsidize a losing service when you don't have profit coming in from other services," Miller said. And staffing is a persistent problem. Harrison County Hospital in Corydon, Indiana, a small town on the border with Kentucky, ended its obstetric services in March after hospital leaders said they were unable to recruit an obstetric provider. It was the only delivering hospital in the county, averaging about 400 births a year. And most providers don't want to remain on call 24/7, a particular problem in rural regions that might have just one or two physicians trained in obstetrics. In many rural areas, family physicians with obstetrical training fill the role of both obstetricians and general practitioners. Ripple effects Even before Harrison County Hospital suspended its obstetrical services, some patients were already driving more than 30 minutes for care, the Indiana Capital Chronicle reported. The closure means the drive could be 50 minutes to reach a hospital with a labor and delivery department, or to see providers for prenatal visits. Longer drive times can be risky, resulting in more scheduled inductions and C-sections because families are scared to risk going into labor naturally and then facing a harrowing hourlong drive to the hospital. Having fewer labor and delivery units could further burden ambulance services already stretched thin in rural areas. And hospitals often serve as a hub for other maternity-related services that help keep mothers and babies healthy. "Other things we've seen in rural counties that have hospital-based OB care is that you're more likely to have other supportive things, like maternal mental health support, postpartum groups, lactation support, access to doula care and midwifery services," said Katy Kozhimannil, a professor at the University of Minnesota School of Public Health, whose research focuses in part on maternal health policy with a focus on rural communities. State action Medicaid, the state-federal public insurance for people with low incomes, pays for nearly half of all births in rural areas nationwide. And women who live in rural communities and small towns are more likely to be covered by Medicaid than women in metro areas. Experts say one way to save rural labor and delivery in many places would be to bump up Medicaid payments. As congressional Republicans debate President Donald Trump's tax and spending plan, they're considering which portions of Medicaid to slash to help pay for the bill's tax cuts. Maternity services aren't on the chopping block. But if Congress reduces federal funding for some portions of Medicaid, states - and hospitals - will have to figure out how to offset that loss. The ripple effects could translate into less money for rural hospitals overall, meaning some may no longer be able to afford labor and delivery services. "Cuts to Medicaid are going to be felt disproportionately in rural areas where Medicaid makes up a higher proportion of labor and delivery and for services in general," Kozhimannil said. "It is a hugely important payer at rural hospitals, and for birth in particular." And though private insurers often pay more than Medicaid for birth services, Miller believes states shouldn't let companies off the hook. "The data shows that in many cases, commercial insurance plans operating in a state are not paying adequately for labor and delivery," Miller said. "Hospitals will tell you it's not just Medicaid; it's also commercial insurance." He'd like to see state insurance regulators pressure private insurance to pay more. More than 40% of births in rural communities are covered by private insurance. Yet there's no one magic bullet that will fix every rural hospital's bottom line, Miller said: "For every hospital I've talked to, it's been a different set of circumstances." _____ _____ Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
